Compliance and business integrity

Social Security and Welfare Programme Compliance

Payment accuracy, correctness and integrity

Payment accuracy reflects the department’s ability to pay the right person the right amount of money, through the right programme, at the right time, and takes into account customer and administrative error.

Payment accuracy is calculated by the Department of Social Services (DSS) using data derived from random sample surveys. DSS reports on payment accuracy in its annual report available at dss.gov.au

Payment correctness for social security or family assistance payments is also calculated using data derived from random sample surveys. Payment correctness is the percentage in surveys where the customer received a correct payment without administrative error. With a target of 95% in 2015-16, the department achieved payment correctness of 98.4% compared to 98.1% in 2014-15.

Payment integrity ensures that payments made on behalf of government are managed correctly and that appropriate checks exist to minimise the likelihood of errors.

Customer compliance

In 2015-16 the department continued its effective management of identified payment accuracy risks. The department uses a number of interventions to address payment risk and increasingly uses new strategies to educate and assist people to receive their correct entitlements and meet their obligations and responsibilities. We work with people to resolve issues when they have not complied with requirements because of genuine mistakes.

During the year the department’s targeted early intervention strategies included sending letters and SMS messages to remind our customers of their obligations and to prompt self-correction. Whenever possible we made immediate contact, usually by phone, to remind our customers about their reporting obligations and to update their records to avoid overpayments.

In 2015-16 more than 260,000 customers were contacted using these approaches which prevented $63.7 million in overpayments (see Table 45 below). This contact from the department allowed customers most at risk to receive the support they needed to ensure their payments were correct.

Table 45: Social welfare payments compliance activity

2013-14

2014-15

2015-16

% change
since
2014-15

Interventions

869,082

923,462

987,895

+7.0

Reductions in payments

77,272

52,100

69,921

+34.2

Fortnightly savings
in future outlays

$19.2
million

$18.2
million

$21.7
million

+19.2

Prevented outlays

$51.8
million

$61.4
million

$63.7
million

+3.7

Debts raised

101,331

126,134

210,0091

+66.5

Total debt value

$283.6
million

$362.1
million

$694.6
million1

+91.8

1. The introduction of the Strengthening the Integrity of Welfare Payments - Employment Income Matching budget measure saw an increased focus on addressing historical overpayments. This compliance activity has resulted in a high incidence of debt and has subsequently contributed to a significant increase in debt savings from the 2014-15 financial year.

The department’s risk-based compliance approach uses data from a variety of sources to identify and manage payment risks. Data from internal and external sources is used in data-matching exercises to identify customers at risk of incorrect payment. In 2015-16 external sources included:

the Australian Securities and Investments Commission

the Australian Taxation Office (ATO), other than using the Data-matching Program (Assistance and Tax) Act 1990

the Commonwealth Superannuation Corporation

the Department of Education and Training

the Department of Employment

the Department of Health

the Department of Immigration and Border Protection

the Department of Veterans’ Affairs (DVA)

Defence Housing Australia

public and private education providers

state and territory departments of corrective services

state and territory registrars of births, deaths and marriages

state and territory land titles offices

In accordance with section 6 of the Data-matching Program (Assistance and Tax) Act 1990, the department, the ATO and DVA participated in 2 complete data-matching cycles for the department and 4 complete data-matching cycles for DVA. These activities resulted in 6,585 reviews and returned $65.3 million in net benefits to government.

Table 46: Social welfare reviews and net benefits to government

2013-14

2014-15

2015-16

% change
since
2014-15

Reviews

27,632

24,178

6,5851

-72.8

Net benefits

$132.7 million

$134.6 million

$65.3 million

-51.5

1. There were significant improvements made towards Employment Income Matching (EIM) interventions which uses Pay As You Go payment summary data provided by the ATO. EIM targets the same Earned Income risk as the Data-matching Program. A redesigned process has enabled more EIM reviews to be completed and improved treatment of the risk.

See Appendix E for more information about the department’s Data-matching Program.

Reviews of Social Welfare payment decisions

Merit reviews

A customer may ask for a review of a decision-an independent process undertaken by an officer not involved with the original decision. The review officer will contact the customer to explain the original decision and may ask for further information. The review officer can affirm, vary or set aside the original decision.

In 2015-16 the department continued to focus on managing outstanding reviews of decisions. An improved business model saw a significant reduction in the number and the age of reviews on hand. This, in turn, led to an overall decrease in the average time taken to finalise customer reviews.

Once this internal process is completed, if still unsatisfied the recipient can apply for a review by the Administrative Appeals Tribunal (AAT) Social Services and Child Support Division (referred to as the ‘AAT First Review’). If the recipient still remains unsatisfied after the AAT First Review, they have a right to request a further review by the AAT General Review Division (referred to as the ‘AAT Second Review’). The AAT First Review process was previously undertaken by the Social Security Appeals Tribunal (SSAT). From 1 July 2015 the SSAT was amalgamated into the AAT which assumed responsibility for both levels of the review process.

Decisions most commonly challenged were:

rejection of claim for payment such as Disability Support Pension

raising or recovery of debts, including Family Tax Benefit reconciliation debts

participation failure

start date of payment

rate of payment

Table 47: Social welfare payments merit review applications

Applications

2013-14

2014-15

2015-16

Internal reviews

115,618

111,982

105,786

SSAT/AAT First Review1

9,812

12,289

11,198

AAT/AAT Second Review1 customer applications

1,924

1,999

2,178

AAT/AAT Second Review Secretary applications2

45

75

81

1. From 1 July 2015 the SSAT was amalgamated into the AAT which assumed responsibility for both levels of the review process. The 2 levels of review are now referred to as the AAT First Review and the AAT Second Review.

2. This refers to the Secretary of any department where the Minister is responsible, under the Administrative Arrangements Order, for part of the social security laws that allow decisions to be appealed to the AAT.

Table 48: Social welfare payments merit review outcomes

Unchanged decisions1

Changed decisions

2013-14

2014-15

2015-16

2013-14

2014-15

2015-16

Internal review officer

65.3%
80,370

66.1%
83,286

62.5%
60,963

34.7%
42,662

33.9%
42,732

37.5%
36,617

SSAT/AAT First Review2

75.1%
7,686

75.3%
7,974

74.6%
8,195

24.9%
2,548

24.7%
2,619

25.4%
2,788

AAT/AAT Second Review2 customer applications

75.2%
1,416

79.7%
1,390

79.2%
1,542

24.8%
468

20.3%
354

20.8%
404

AAT/AAT Second Review Secretary applications3

73.3%
22

50.0%
18

50%
43

26.7%
8

50.0%
18

50%
43

1. Unchanged decisions include reviews that have been withdrawn.

2. From 1 July 2015 the SSAT was amalgamated into the AAT which assumed responsibility for both levels of the review process. The 2 levels of review are now referred to as the AAT First Review and the AAT Second Review.

3. This refers to the Secretary of any department where the Minister is responsible, under the Administrative Arrangements Order, for part of the social security laws that allow decisions to be appealed to the AAT. Secretary applications are managed in accordance with the partner department’s instructions.

Debt management

In 2015-16 the department raised 2,439,431 social welfare debts to the value of $2.8 billion.

Debt recovery

People with payment debts have several options available to make repayments, including by cheque, money order, direct debit, BPAY, phone or internet banking, or Australia Post’s Post Billpay service. For a customer still receiving a payment the most common method of repaying a debt is through withholdings from their payment.

When a customer has difficulties repaying a debt, the department organises a repayment agreement that ensures the customer is not put in serious financial hardship.

When a person is no longer receiving payments and has failed to make or maintain a recovery arrangement, the department may use a contracted collection agent to recover a debt, with commission only paid on the recovered amount. The department also has a dedicated team with investigative and intelligence capability to locate former customers who have large debts and the capacity to pay them. If necessary, legal action may be taken to recover the amounts owed.

Table 50: Social welfare customer debt recovered

2013-14

2014-15

2015-16

Total debts recovered

$1.27 billion

$1.43 billion

$1.54 billion

- amount recovered by contracted agents

$124.8 million

$131.3 million

$144.7 million

- percentage of total recovered by contracted agents

9.9%

9.2%

9.4%

Compensation payments

The Social Security Act 1991 encourages people to use private financial resources, such as compensation payments, before accessing the taxpayer-funded social security system. It also ensures that any compensation payments for an injury or illness are considered in the calculation of any social security benefits. Under the Act:

people can be compelled to claim for compensation when compensation may be payable

the department can recover past payments of social security from arrears payments of periodic compensation payments and lump-sum compensation payments

periodic payments, such as weekly workers’ compensation payments, reduce directly dollar for dollar the rate of social security payments otherwise payable. Any excess is treated as income for partners of compensation recipients

if a person receives a lump-sum compensation payment, they will not receive social security payments during the preclusion period

So that individuals fully understand the effect of a compensation payment on future income support payments, the department contacts them to ensure they are aware of preclusion periods. This helps people make informed decisions about their financial position.

Individuals and their legal representatives can also access a tool on our website to estimate the impact of a pending compensation claim. Information is also available for compensation recipients, compensation authorities, and legal, insurance, union and community representatives.

Serious non-compliance

Our intelligence capability

In 2015-16 the department conducted a variety of intelligence activities to detect and target potential fraud and non-compliance associated with welfare, child support and health programmes. This included supporting a number of joint taskforce activities, testing new detection programmes, supporting the government’s New Compliance Data Sources and the Strengthening the Integrity of Welfare Payments measures, assessing tip-offs provided by the public, and enhancements to the department’s well-established detection capability. The department also used data analytics to improve and refine the detection of fraud and non-compliance.

The department continued to work closely with a number of other government agencies including the Australian Transaction Reports and Analysis Centre, the (then) Australian Crime Commission, the CDPP and the Australian Federal Police (AFP) to promote law enforcement. See Partnerships in combating crime.

As a result of the machinery of government changes in September 2015, responsibility for health provider compliance with the Medicare Benefits Schedule, Pharmaceutical Benefits Scheme and allied health services moved to the Department of Health. The department retained responsibility for customer compliance activities within the health programmes. We reviewed our fraud control framework to focus more clearly on public and patient compliance when claiming and receiving health programme benefits. The updated framework also includes building further capability to detect potential customer fraud.

Taskforce integrity

As part of the Strengthening the Integrity of Welfare Payments 2015 Budget measure, Taskforce Integrity was officially launched in November 2015. The taskforce’s aim is to change localised cultures of non-compliance and welfare fraud and to positively influence customer behaviour.

Run by the department and supported by the AFP, the taskforce is led by an AFP Assistant Commissioner. The taskforce draws on capability from across the department and the AFP to identify and target geographic areas where data analysis points to a higher risk of non-compliance and suspected welfare fraud.

Since the taskforce was established to 30 June 2016, it has undertaken 12,968 compliance reviews, raised over $19.6 million in debts to the Australian Government, and identified and progressed 135 cases for further investigation.

Public tip-offs

The Australian Government is serious about protecting the integrity of the welfare and health programmes to ensure available funds are directed to those in the community who need help the most. While the overwhelming majority of people are honest, there are a small number of people who try to defraud the welfare and health systems and actively try to avoid detection.

Effective handling of tip-offs is a key element in maintaining community confidence in the integrity of payments. All tip-offs from the public suggesting a person may be receiving a payment or benefit to which they are not entitled are assessed by specialist staff. The department invests substantial effort to ensure they are dealt with appropriately.

Information from the public about people who may have incorrectly or fraudulently claimed or received a payment or benefit is used to review entitlements and, if appropriate, carry out investigations. People can provide information to us by:

reporting via the fraud page on our website

phoning the Australian Government Fraud Tip-off Line on 131 524

writing to us at PO Box 7803, Canberra BC ACT 2610

In 2015-16 we received more than 42,000 tip-offs through the Australian Government Services Fraud Tip-off Line and more than 67,000 tip-offs from other sources.

Table 51: Tip-offs

2013-14

2014-15

2015-16

% change
since
2014-15

Tip-offs through Fraud Tip-off Line

52,942

49,140

42,825

-12.9

Tip offs from other sources

51,134

59,701

67,973

+13.9

Fraud investigations

The department investigates fraud and refers appropriate matters to the CDPP for it to consider prosecution. The department’s fraud control processes are deliberately focused on the most serious cases of fraud, rather than on people making honest mistakes. See Our intelligence capability.

In 2015-16 the department completed 1,507 investigations into fraud compared to 2,346 investigations in 2014-15. These investigations covered a range of risks including:

undisclosed income or assets

identity fraud

undeclared family relationships

residency and absence from Australia

study requirements

Of the investigations completed in 2015-16:

1,354 related to the department’s Social Security and Welfare programme

25 related to the department’s Child Support programme

128 related to the department’s Health programme

During the year, to support the investigation capability in a digital environment, the department:

enhanced its digital forensic capability

further developed its real time, risk profiling capabilities to enhance our ability to address online fraud and prevent incorrect payments

Optical surveillance

Optical surveillance involves observations of people, vehicles, places or objects. The department continued to use optical surveillance where other types of investigation techniques were unsuccessful and when there was a reasonable suspicion of fraud, serious cases of child support avoidance or income minimisation.

In 2015-16 the department completed 31 matters where optical surveillance was used compared to 20 in 2014-15.

Partnerships in combating crime

To ensure a strong response to fraud and non-compliance, the department continues to work in cooperation with a number of government agencies and private sector entities. These partnerships included new information-sharing arrangements, focused intelligence activities and investigations, proactive matching on lists of criminals, active involvement in taskforces, and regular data matching.

AUSTRAC

The Australian Transaction Reports and Analysis Centre (AUSTRAC) gives the department access to its records of significant or suspicious financial transactions. Commencing on 1 January 2016 AUSTRAC and the department introduced an automated data match to supplement existing data acquisition and sharing arrangements. This information is used to detect undisclosed income or target unexplained wealth.

Real time access to this intelligence will strengthen the agility of the department and enable us to better tackle serious and systemic attacks on the welfare system.

Australian Crime Commission

The department provided ongoing support to the (then) Australian Crime Commission (ACC) to address the threat of organised crime. It had 2 officers seconded to the ACC for this purpose-1 to the ACC’s Fusion Centre which focuses on financial crime; and another to the Australian Gangs Intelligence Coordination Centre. As part of the ongoing arrangement, the department also received information and intelligence from the ACC on issues that are identified as associated with social and welfare fraud and non-compliance.

Australian Federal Police

The AFP supports the department’s fraud control efforts. During the year 10 seconded federal agents worked with the department, assisting with our investigations and preparing and executing search warrants. These federal agents also provided training and advice to departmental investigators.

The department is also a member of the Fraud and Anti-Corruption Centre (FAC) established by the AFP. The FAC responds to serious and complex fraud against the Australian Government, corruption by Australian Government employees, foreign bribery and complex identity crime involving the manufacture and abuse of credentials. The department provides 1 officer on secondment as part of this response.

Commonwealth Director of Public Prosecutions

The department and the CDPP continued to work together to respond to fraud against social, health and welfare programmes. The department detects and investigates potential fraud and refers matters involving criminal intent to the CDPP which decides whether to prosecute matters.

In 2015-16 the department referred 996 cases to the CDPP compared to 1,470 referrals in 2014-15. These referrals included:

980 cases related to customers receiving social security or family assistance payments compared to 1,366 in 2014-15

Child Support customer compliance

In 2015-16 the department continued to implement its child support compliance programmes. The department uses various activities to collect ongoing and overdue child support including those listed in the following tables.

Table 52: Child support compliance and enforcement actions

Number of actions

Child support collected/corrected
$ million

2013-14

2014-15

2015-16

2013-14

2014-15

2015-16

Tax refund intercept payment

111,612

105,202

97,679

130.4

121.5

114.6

Departure prohibition orders

271

218

9111

6.2

6.7

7.9

Litigation

186

169

1,841

4.4

3.7

6.4

1. There has been a significant increase in the number of Departure Prohibition Orders and Litigation cases reported due to a more accurate reporting source being used for these work types.

Table 53: Employer withholding from wages and salaries

30 June 2014

30 June 2015

30 June 2016

Active paying parents with employer withholding payments set up
(The department may initiate this measure for both current liability and child support debt)

63,982

64,390

62,702

Table 54: Deductions from Centrelink payments and DVA payments

2013-14

2014-15

2015-161

Amounts collected from Centrelink and DVA payments
(These deductions may be made for both current liability and child support debt)

$28.9 million

$30.5 million

$69.4 million

1. The current year shows the total amount of deductions from both Centrelink and DVA payments. Previous years show only the amount of additional deductions received as a result of a legislative change to increase the maximum allowable deduction amount from Centrelink payments. The total figures also included the DVA deductions.

Table 55: Prohibition of departure from Australia

2013-14

2014-15

2015-16

Amounts collected under Departure Prohibition Orders
(Departure Prohibition Orders preventing overseas travel are issued to customers who have not made satisfactory arrangements to clear substantial debts)

$6.2 million

$6.7 million

$7.9 million

Table 56: Litigation

2013-14

2014-15

2015-16

Amounts recovered through litigation
(The department commences litigation targeting parents who repeatedly avoid paying their child support when other enforcement options have been unsuccessful and an assets or income stream is identified)

$4.4 million

$3.7 million

$6.4 million

Reviews of Child Support decisions

In accordance with the Child Support (Registration and Collection) Act 1988, the department is required to finalise all objections to child support decisions within 60 days for domestic customers and 120 days for international customers.

Parents are contacted through the objection review process before any decisions are made. To ensure procedural fairness, both parents are given the opportunity to provide information to ensure decisions are accurate and based on individual circumstances including financial capacity.

The department provides feedback to original decision makers on the outcomes of objections to help improve future decision making.

We continue to review and enhance the objections process to make it more accessible to customers while continuing to uphold the integrity of the Child Support Scheme.

Table 57: Objections received and finalised

2013-14

2014-15

2015-16

Number of objections received

15,074

16,317

16,698

-percentage relating to care

34.3%

34.7%

35.8%

-percentage relating to change of assessment

18.4%

18.7%

16.8%

-percentage relating to estimates

15.0%

14.2%

13.3%

Percentage finalised in 60 days-domestic

80.4%

83.8%

94.8%

Percentage finalised in 120 days-international

82.8%

86.6%

96.5%

Objections to change of assessment

The objection rate to change of assessment decisions has decreased slightly from 16.9% in 2014-15 to 16.8% in 2015-16. This is a decrease of 168 change of assessment objections from 2014-15 or a 0.9% decrease.

Table 58: Change of assessment applications finalised and objections received

2013-14

2014-15

2015-16

Change of assessment applications finalised

18,074

18,092

17,232

Change of assessment objections received

2,770

3,056

2,888

Administrative Appeals Tribunal reviews

The Social Security Appeals Tribunal (SSAT) was amalgamated into the Administrative Appeals Tribunal (AAT) from 1 July 2015 (see Merit reviews for details of the amalgamation). Part of the AAT’s role includes responsibility for independently reviewing objections to child support decisions. The AAT First Review received 2,150 applications for review of child support decisions in 2015-16 compared to 2,053 applications made to the SSAT in 2014-15.

Table 59: Child Support AAT review outcomes1

Unchanged decisions2

Changed decisions

2013-14

2014-15

2015-16

2013-14

2014-15

2015-16

AAT First review

508

582

555

878

753

806

1. The total number of applications will not match the number of changed/unchanged decisions due to a number of applications either withdrawn, dismissed or still in progress.

2. Unchanged decisions are those made by the AAT affirming the original decision made by the Child Support Registrar. Unchanged decisions do not include withdrawn or dismissed applications.

To improve service delivery and policy outcomes the department continued to analyse child support review decisions to identify any systemic procedural or operational issues.

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